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question of the brewer losing out if that suggestion had been accepted because encompassed in the suggestion was the clear intention that the brewer would get the appropriate rate for the tenancy.Surely a tenant who has given a lengthy commitment to a business the success of which has been largely, if not solely, due to the efforts of that tenant should accrue some property rights. I hope that the Minister will acknowledge that, and that as the Bill goes to another place he will liaise to achieve modifications to strengthen the legislation. I cannot understand the Government's attitude in this matter. How can they say that a council house tenant can accrue property rights and that the management of a company that is to be disposed of can accrue management rights that would lead to a management buy-out while saying that there is no equivalent accrual for the tenant of a brewery house?
Mr. Redwood : The hon. Gentleman seems to be suggesting that there is an absolute right for a management buy-out. There is no such right in business law in Britain. There are voluntary agreements in the same way as there can be voluntary agreements for publicans to buy pubs from their landlords. Business and residential tenancies are on a different basis, and to introduce a right to buy in one sector of the business tenancy market would give rise to all sorts of distortions between this and other types of business.
Mr. Henderson : The Minister should have thought about my point before he intervened. We are not suggesting that. The Government have been keen to dispose of public sector investments such as the National Freight Corporation. The first thing that they try to do is to establish that there is a management buy-out right and management is encouraged to come forward with proposals so that it can continue to earn the property rights that it has established through its commitment to the business. It is completely inconsistent for the Government not to recognise that when a brewery is disposing of a tenanted public house property rights should accrue.
What is so different about pub tenants? Do they not want to make a contribution to the success of a business and earn property rights? Should they not benefit from any improvement in a competitive environment? Have the Government moved away from their original position, and are they now saying that they no longer give ideological support to property rights?
When it suits the Government, there is one law for Conservative ideology and quite another when the Conservative party's significant paymasters seem likely to be tied by legislation. Is the relationship between the brewer and the tenant to be linked to the strong support that brewers have traditionally given to the Conservative party? Has Conservative ideology been extended to that front as well? The Government have failed to face the genuine points made about property rights for pub tenants.
We heard in Committee that the Government have sympathy for the widow's clause, or what could be called the Annie Walker clause. The Minister spoke about that today. Pub tenants will be looking for more than sympathy if the existing legislation is the only protection that may be
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given to a spouse on the death of his or her partner.If there is any argument about the estate, the surviving spouse could be involved in lengthy arguments about its disposal before being able to clarify whether he or she would be able to continue with the tenancy. Suggestions about that were advanced by the Opposition and others in Committee but they were not accepted. If the Government are prepared further to consider the matter and perhaps to talk to their colleagues in another place, protection for a spouse could be built into the legislation. That would eliminate the worry about whether the spouse is to benefit from any of the estate and would make an important contribution to strengthening the legislation.The Government have failed to listen to arguments about compensation, some of which were advanced vehemently by Conservative Members. It is not good enough for the Minister to say that he has an open mind on the matter. Pub tenants could lose their tenancies because of a change in circumstances faced by breweries, and those people will be looking for more than an open mind. They will seek a firm commitment that in the event of them having to dispose of their tenancies they will get fair compensation. They do not want to be dragged through endless court cases in an attempt to establish that they have a right to higher compensation.
If such court cases ensue, it is clear that the people involved would be unattractive propositions to secure a future tenancy with the same or another brewer. If compensation were automatic it would be accepted by the industry, and when commercial circumstances changed giving rise to a legitimate need for a brewer to dispose of a pub, nothing would be held against the tenant who insisted on receiving the proper compensation. The tenant would be free to secure another tenancy to protect his living. That is important, and it is not enough for the Government to say that they will keep an open mind. It is incumbent on them to make firm proposals.
The Government have also failed Scotland. In Committee it was said that hundreds of tenancies in Scotland are not covered by the legislation. By and large, the same circumstances exist there, although the market in Scotland is dominated by two brewery groups. Tenants in Scotland will look for some protection. I understand the problems of incorporating Scottish measures in the Bill, but I hope that the Government will bring forward other appropriate legislation to protect the industry and the tenants.
I protest about the Government's failure to take account of the arguments in relation to the contracting-out amendment that has just been lost on a vote. It was important in building up comprehensive and balanced legislation that would regulate the industry in the future and would give the tenant the necessary degree of protection, but would not completely hamstring the brewer. It is absolutely crucial that there should be such a provision. It is not enough for the Government to talk about monitoring what will happen and about being prepared to look at the situation in future.
It is quite clear, from the arguments that were put forward in previous debates in this House, that many hon. Members recognise that this is not a question of landlord and tenant going hand-in-hand to court and saying, "Please may we contract out so that we may make our own arrangements?" That is not the way that the world works ; certainly it is not the way that the business world works. Inevitably, human nature being what it is, landlords would
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seek to sign agreements that included provision for contracting out of the legislation, and, through time, tenants who did not accept those clauses would not be offered tenancies.Another danger is that brewery companies could get together and form an unofficial, informal cartel to protect the interests of the brewer landlord. Increasingly, I believe, tenants would be offered only contracts on a mutually agreed basis that were not covered by the Act. People who know the industry will realise that, inevitably, those contracts would be weaker than contracts signed on a free basis but with minimum protection built in by the legislation.
The real test of the Government's willingness to listen to the arguments at all stages of the progress of this Bill is whether they are prepared to face up to the situation that has been presented in relation to contracting out. If they were so prepared, they would face up to the brewers' lobby. In that case, the silence that the brewers have maintained over recent months would soon give way to an outcry from them. I believe that the Government could have faced that situation and that they could have argued with the brewers that, in order to bring about balance, it was necessary to have a different relationship in respect of pub tenancies from that prevailing in the case of shops. Throughout the discussion of the Bill the Government have had ample opportunity to listen to the arguments, to take heed of the points that have been made, and to make accommodations. I should have liked to be able to recommend firmly that the Opposition support the Third Reading of this Bill. However, those who have followed the debate will be able to draw no conclusion other than that the Government have not been prepared to listen, that there has been no movement from the Government on the main issues. There has been no movement on the issue of timing, on the issue of the right to buy, on the issue of compensation, or on the issue of protection for spouses. Above all, there has been no movement on the vexed question whether pub landlords and brewers should be able to contract out of the legislation.
Thus, the Bill is left ambiguous, unbalanced, spineless, and stacked in favour of the brewer. There are minor areas in which protection has been achieved for the tenant, but in all the circumstances I have grave misgivings about recommending that the Bill be given a Third Reading. My hon. Friend who will wind up for the Opposition may well be able to assist the House by giving some direction on the matter. I hope that, having heard the debate, he will feel that there would be merit in giving the Bill a Third Reading. However, as I have said, I have serious misgivings about letting the legislation proceed to the next stage.
5.25 pm
Mr. Ivan Lawrence (Burton) : I think that the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) has gone over the top. Manifestly this is, in essence, a good Bill. It is one that all sides have agreed is necessary and will be for the benefit of the industry. It is about the only good thing to have come out of the whole Monopolies and Mergers Commission report, which the Government adopted too speedily and which will inevitably reduce the number of tied houses--indeed the number of public houses--and may even reduce the
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number of British breweries as brewers have to choose between the capital value of their manufacturing element and the capital value of their tied house element. Already there are signs that brewers in my constituency are having to reassess their whole contribution to the industry. That is very sad, and it was a bad day when the Government committed themselves to accepting the report.Today, however, we are dealing with the good aspect of the report--the aspect which gives licensees protection. One must ask whether the Bill is as good as it might be. I think the answer is that it is not perfect but that it is perfectable. I do not for one moment doubt the Government's good intentions. I am grateful to my hon. Friend the Minister for the assurances that he has given in response to interventions by the hon. Member for Rotherham (Mr. Crowther), by myself and, no doubt, by others expressing concern about monitoring.
I do not doubt that, in general, the brewers' intentions are good. After all, the good of the industry is their concern. That means also the good of the tenants, who are a vital part of the industry. If the tenants are unhappy or dissatisfied, the industry will not be so successful or so flourishing as it would be if they were happy. Nor do I share the conspiracy theory so beloved of the Opposition in regard to this and many other matters. But I am sorry that the Government did not feel able to go one small step further and to commit themselves to ensuring that the legislation would not act unfairly against the tenant in that it might result in undue pressure or inadequate compensation.
Here I must ask myself some questions. If I were a tenant, would I feel terribly reassured by the fact that I could get legal advice as to my legal rights? Would I feel terribly reassured by being able to go before a court and ask it to decide on those rights? Would I feel reassured by the Government's undertaking to monitor the Act, bearing in mind that they have given no further assurance? I must ask myself whether, in some circumstances, I might have fears that I could lose my livelihood and that, in the end, I might have no choice about entering into a contract to which I was very much the weaker party, and under which I might lay myself open to exploitation. When, as a hypothetical licensee, I ask myself those questions I have to reply that in some circumstances I might indeed have just those fears. This is not a matter of life and death. It is not a matter of the utmost gravity. It is not a resigning matter. It is not a matter that will arise very often. However, it seems to me to be one in respect of which good will--in its common-sense meaning, not its legalistic meaning--might bring a more reassuring response from the Government. It would surely be sensible for the Government to show just a modicum more good will and to give that extra reassurance to a very particular kind of tenant--the tenant who stands to lose not only the roof over his head but his very livelihood and who is, therefore, more subject to pressure even than tenants in other circumstances. Therefore, I ask my hon. Friend the Minister whether he could not, at this late stage--or, if he would have to get involved in too many consultations before giving a commitment, when the matter comes before another place--give an undertaking that the Government will look again at the aspect of good will ; that he will give the further reassurance that he will be prepared to act by further legislation if necessary if his monitoring turns up the conclusion that this legislation is not working as
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effectively, efficiently or fairly as was intended. Perhaps in the Upper House that matter will be given greater consideration. That is the question that I ask of my hon. Friend, who I know as a reasonable, flexible, sensible, understanding and caring Minister. I ask him to give that gentle, insubstantial--except in its effect--assurance that the matter will be further considered when the Bill is presented to another place. If he will do so, I shall give the Bill my wholehearted support and not just my majority support with a minority of dissenting feeling.5.30 pm
Mr. Stan Crowther (Rotherham) : I share the disappointment of other right hon. and hon. Members that the Bill reaches Third Reading in exactly the same form that it received its Second Reading. It is most unfortunate that the Government have failed to make even one concession. The Minister said that he has received letters from many right hon. and hon. Members-- and no doubt letters from many of his own right hon. and hon. Friends were among them. Apparently, those letters had no more impact than all the arguments made in Committee and on Report. I share the hope that the Minister will introduce improvements to the Bill when it reaches the other place. The tragedy is that we have totally failed to persuade the Minister that the business in question is unique and has many features that distinguish it from other types of premises. It is irrelevant to say, as the Minister did, that the Bill provides the same protection as that given to other types of business tenants. The tenants of licensed premises operate in wholly different circumstances. I shall not bore the House by recounting the catalogue of features that distinguish licensed premises. The Minister has already acknowledged one of the most obvious--that in most cases the premises serve as the tenant's home as well as his place of business. That alone is good reason for providing additional protection. Also, the tenant himself must hold a licence, apart from that granted in respect of the premises. I know of no other business in which the individual running it must hold a licence so that his customers can consume on the premises the goods that he sells.
Mr. Dixon : Does my hon. Friend agree that the individual can also lose his licence through circumstances beyond his control? For example, a person might come to his public house and cause a disturbance, and the police might then object to the publican continuing to hold his licence-- the loss of which would also mean the loss of his livelihood.
Mr. Crowther : My hon. Friend is certainly correct. Also, if a licensee loses his premises because of a decision by his landlord, unlike a butcher, draper or grocer, he cannot move into new premises just down the road and open another business. That is because the whole operation is controlled by a licensing system. The licensee of a public house is more vulnerable than an ordinary shopkeeper, which is another reason why he should be given additional protection. Another unique feature is that the person carrying on the business does not own the goodwill of it. As the Monopolies and Mergers Commission report pointed out, he is very much in the position of being an employee of the
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brewery. He is there to sell its products-- but at the end of the day, there is nothing to cover him for goodwill. The MMC pointed out that people in that situation should be given extra protection, to strengthen their position as independent business men.It is a question of allowing licensees to compete effectively. I thought that a Government committed to competition would be happy to accept amendments to improve the competitiveness of these small business men. Again, I hope that that argument will be taken into account. All is not yet lost, because the Bill has still to go to another place.
I took the view from the start that we would not be able to amend the Bill through a series of Divisions and that the only hope was to persuade the Minister with our arguments in the belief that he was capable of being swayed by them. We have not yet succeeded in that, but we hope for something in the next few weeks.
I emphasise the point made by my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) that our right-to-buy proposal is narrow in scope, as the Minister acknowledged in Committee. The narrowness of its scope led me to believe that the Government would accept it. It deals only with the situation in which a brewery is proposing to sell a public house to an individual or individual who is not in the brewing business. Only when the pub is going out of brewery ownership do we say that the existing tenant should have an opportunity of buying it at its market value. No one is suggesting that the brewery should lose any money in the transaction-- but the man or woman already running the pub should be able to take over the premises if he or she wishes to do so. They may have to borrow the cash, but at least they will have an opportunity to invest in a business that they have been running for a long time. A classic example of the need for a right-to-buy provision concerns a pleasant little Victorian pub in my constituency called the Butcher's Arms, which I frequent from time to time. Until a few months ago, it was owned by a company which is not primarily a brewery but which has brewing interests through an acquisition. When the tenant heard that the owners had decided to sell his pub, he asked to be allowed to make a bid for it. He offered a reasonable price, and the owners told him, "You'll need to improve your offer a little because you have a rival. If you can make your price a little higher, you'll be all right." The licensee accordingly increased his bid by £10,000 and waited for the result.
He heard the outcome not from the owners but from his rival, who walked into his premises one day and said, "I've bought your pub." That is not a very nice thing to happen to any licensee. After only a few weeks, that same pub is again on the market at a price £45,000 higher than that at which it was sold at the end of last year, which is a 50 per cent. increase. Such incidents are not helpful to the trade and certainly not helpful to a licensee trying to keep his business running while the ownership of his pub keeps changing hands.
I regret that the Minister has been unable to find a solution on compensation. He acknowledges that there is a problem, so I hope that he will find a suitable formula before the Bill goes to the Lords. He says that he still has an open mind, so I hope that he will pay particular attention to the comments of the hon. Member for Ilford, North (Mr. Bendall) in Committee.
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I thought that the contribution of the hon. Member for Ilford, North was very helpful, straightforward and clear. He spoke on the basis of his long experience. At the third sitting of the Standing Committee he said :"The only answer that I can see is for the goodwill to be valued when the tenant first takes the lease and revalued when he goes."--[ Official Report, Standing Committee G, 25 January 1990 ; c. 64.] What could be simpler than that? The Minister says that it would be difficult to write that into the legislation.
Mr. Bendall : I consulted the Royal Institute of Chartered Surveyors, which has some knowledge of valuing. There is a problem with valuing goodwill on the way in and the way out. Its suggestion was that the multiplier on the rateable value for pub tenancies should be greater than the multiplier normally afforded.
Mr. Crowther : I am grateful for that intervention. I cannot dispute expert professional opinion, but I do not understand why the valuation of goodwill should be terribly difficult at the beginning and at the end of a tenancy, because other businesses are bought or sold on that basis. I should have thought that the use of the multiplier on the rateable value would be a less realistic method, in the sense that it would not take account of the extent to which the business has improved during the time that the tenant was in the premises. Whichever way it is done, there is a case for providing more compensation when businesses are repossessed by the landlord for management. It is a matter of justice.
I accept that there are difficulties, and I do not pretend that it is a simple matter, but, after all, Ministers are in the business of providing solutions. I should have thought that that is the Government's job in such a case. We are talking about justice, and I hope that the Minister will find a way to provide justice in this matter. If he does that, it will be a better Bill than it is at present.
I agree with my hon. Friend the Member for Newcastle upon Tyne, North that at present the Bill falls a long way short of what is desirable. Obviously it is an advance, but not as major an advance as the Minister suggests. It falls down on a lot of matters, and we have done our best to demonstrate how the Bill could be improved. I am sorry that we have not managed to persuade the Government. I remind the Minister that we are talking about a large number of small business men. I think hon. Members on both sides of the House agree that we should encourage small businesses in every way that we can. More protection is needed for small business men, who serve a useful purpose in the community, than is so far provided for in the Bill.
5.42 pm
Mr. Simon Hughes (Southwark and Bermondsey) : The House will be aware that I was not selected to serve on the Standing Committee, but I have read the debates, and I want to make a few comments on a Bill which has, as hon. Members have pointed out, reached this stage unamended.
I start with the premise that the Bill was intended to improve the lot of people whose business in the licensed trade is often also their home, and that that is a good thing. I support the general thrust of the Bill. I am glad that the Government will incorporate the licensed trade into the Landlord and Tenant Act, 1954. I am also reassured by the fact that the concern that I expressed on Second Reading about the widows' year can
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be properly covered by the general Landlord and Tenant Act provision. That will reassure those widows who thought that they might be threatened, particularly after the sudden death of their husbands who were tenants. I understand that they will have the statutory assurance of being able to succeed to the tenancy, irrespective of the fact that they may have entered into any other apparent agreement that would give them fewer rights. I hope that the Minister will reassure me in his winding-up speech that I have understood the matter correctly. Tenants might have signed an agreement that was short of an opting-out agreement but, on the face of it, appeared to mean that after seven, 14 or 28 days they would no longer be able to remain. They will now be overridden by the statutory provisions of the 1954 Act. If that is correct, it is a good thing, and I welcome it.I listened to what the Minister said about the period between now and July 1992. In Committee the Under-Secretary confirmed that 90 per cent. of tenancies will fall due to be renewed in the three years between July 1989 and July 1992. Effectively, other than in a few exceptional cases, there will be a complete turnover of tenants during that period. Therefore, there will be an opportunity for all tenancies to be reviewed before the Act bites in 1992.
Mr. Redwood : The 90 per cent. figure refers to brewery-owned tenancies. The transitional provisions are such that, if the tenancy comes up for renewal prior to 1992, it will come under the security of this legislation. Tenancies that have not been renewed before 1992 will automatically come under the legislation.
Mr. Hughes : I am concerned that a substantial number of tenancies will expire under the present arrangements between the passing of the Bill and 1992 when the Bill bites and will cover them.
[Interruption.] The Minister says no. As I understand it, the whole debate in Committee was about whether the legislation should have immediate effect or take effect in 1992. An amendment was tabled to alter 1992 to 1990 so that there would be no gap. The Ministers' argument was that it would be unfair to impose the new regime on people who had entered into a contract before the legislation was passed and therefore it was only right that the new regime to bring licensed premises under the 1954 Act should come into force after a period of time in which many of the people affected would have had the opportunity to enter new tenancy agreements. Although there will be a provision for opting-out, many present tenants whose tenancies will end are unprotected by the 1954 legislation, and they will not have full statutory protection if they enter a new agreement before 1992.
The Minister said that he will monitor carefully what happens. I am concerned that there will be a danger that in the next two years a potentially large number of brewers may want to use the opportunities that they have at present but will not have post-1992. Unless there is a speedy response to any information that comes forward, monitoring will not produce the answers in time to be of use.
Mr. Redwood : The two operative dates are July 1989 and July 1992. Between those dates, expiring tenancies come under legislation, but 10 per cent. of brewery tenancies will not have been renewed in the transitional period, and when they come up for renewal either shortly after 1992 or a long time afterwards they will
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automatically come under the protection of the Act, although the tenancies have not been renewed. Therefore, I do not think that matters are quite as the hon. Gentleman is saying they are.Mr. Hughes : Could the Minister give a figure which he did not give, as far as I remember, in Committee? What percentage of current tenancies held in the whole of the licensed trade will come up for renewal between the passage of the Bill, assuming it is passed in the next few months, and July 1922? Obviously some tenancies must be at risk in that period.
Mr. Redwood : I do not think that the hon. Gentleman understands the nature of the transitional period. We estimate that 90 per cent. of brewery -owned tenancies will be protected by the transitional provisions, while the residual 10 per cent. will receive such protection automatically in July 1992. I have no figures relating to the non-brewery tenancies, as they are a much more amorphous grouping, and I understand that there is no easy way of establishing the proportion. Given that the typical brewery tenancy lasts for three years, however, the hon. Gentleman can see for himself.
Mr. Hughes : Between now and 1992, when the Act will come fully into force, developments must be monitored responsibly Clearly the most effective monitor is the National Licensed Victuallers Association. I hope that the Minister will at least undertake to ensure that if the association produces evidence of significant "exploitation" by the brewers, he will contemplate prompt legislation. Only a minor amendment would be necessary to protect tenants' rights, and Conservative as well as Opposition Members have asked the Minister for such an assurance.
Clearly, the opting-out provision will increase the NLVA's responsibility ; it will be up to those who advise tenants to ensure that they are not dragooned into signing an exemption agreement with the brewery. As the Minister well knows, it is always difficult to go behind the face of agreements. It is difficult to disprove, in law, the validity of a contract that appears to have been entered into on a valid basis. Pressure is imposed behind the scenes, and a document eventually appears detailing an agreement containing an exemption clause, but the events leading up to that agreement may not bear revelation.
Because it will rarely be possible to look behind the scenes, it is vital for us to make it clear that, once the new regime comes into operation with the exemption possibility always there, the NLVA and others who advise licensees and tenants must explain that they need not agree to an exemption. The presumption in the law must be that they will be covered by that law, although if tenants wish to opt out they should be allowed to do so. In some circumstances, of course, the deal that they are offered will be acceptable, but I hope that they will be much more alert to their rights following the enactment of the Bill.
The hon. Member for Rotherham (Mr. Crowther) and others have expressed the hope that the Minister--who has said that he retains an open mind about some aspects of the Bill--will have an opportunity to reflect further when it goes to another place, and will accept the advice from people in the business that tighter protection is required. My hon. Friends and I do not intend to oppose Third Reading ; that would remove some of the protection that
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will be provided in due course, which would be neither in the interests of tenants nor in the general interest. Nevertheless, I hope that the Minister, and those who take charge of the Bill in the Lords, will not assume from the probable lack of opposition to its Third Reading that further improvements are not necessary. As the hon. Member for Rotherham pointed out, we are talking not only about businesses, but about homes and livelihoods : in that regard, licensed tenants are a special category, distinct from others who are protected by the 1954 Act.5.54 pm
Mr. Dixon : I whipped the Bill through its Committee stage, and it was a good Committee stage ; constructive arguments were put by hon. Members from both sides of the House. The only hon. Member who did not come up with anything constructive was the Minister. Although I was impressed by the number of adjectives used by the hon. and learned Member for Burton (Mr. Lawrence) to describe him, I am afraid that none of them could have come from my mouth, for I am thoroughly disappointed by his failure to accept any of our constructive suggestions.
The idea of the Committee stage, at which amendments were tabled, was to achieve a better and fairer balance, and we attempted to do the same today. My hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse) chaired the Committee, and I have no doubt that he, too, is disappointed. We had gathered from some of the Minister's remarks in Committee that the Government would table appropriate amendments on Report.
I have received a letter from a Mr. Aitkenhead, the NLVA's north-east councillor. His observations about contracting-out have been echoed today by hon. Members of both sides of the House. Mr. Aitkenhead's first point is that some amendment to the Bill is vital. He also says that, when brewery companies sell public houses to non-brewers, the sitting tenant should be given the first option to purchase, and I agree with that as well. His third point is : "Brewery companies should not take houses back for management without agreeing satisfactory terms with the sitting tenant". The Minister implied that compensation would be considered, and I hope that an amendment will be tabled in another place, although it may not be entirely acceptable to us.
Fourthly, Mr. Aitkenhead suggested that,
"In the event of the death of the tenant, the interests of the surviving spouse"
should be protected. The Minister has said that the existing legislation provides some protection. Unfortunately, however, licensed tenants do not accept that the protection is there. That is why my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) spoke of the fundamental need for the Bill to provide for it. People should not have to refer back to the Hansard report of a debate on 26 February to find out what the Minister said. In Committee, it was argued that a certain amount of good will was necessary if tenants were to build up a business for the breweries. I hope that the Minister will show some good will himself, and will table amendments in the other place to deal with some of the useful suggestions that have been made today and in Committee.
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5.58 pmMr. Michael Colvin (Romsey and Waterside) : I apologise for speaking at such a late stage. As I have a considerable interest in the licensed trade, I came into the Chamber to hear what was being said, and found myself provoked to make a short speech.
I begin by declaring an interest as a licensed trade tenant. I am fortunate enough to have a lease rather than a short-term tenancy. Therefore, I am in a slightly different category from most of the licensees who are members of the National Licensed Victuallers Association, which I advised for some years. The association is now advised admirably by the hon. Member for Rotherham (Mr. Crowther). He acts as adviser to the association rather than as its spokesman. We have to bear in mind Burke's definition. The hon. Gentleman does not speak on the association's behalf in this place, but gives it advice and then makes his own judgment about which line to take. The debate on the licensed trade and its tenancy arrangements are fundamental to the trade. A licensee is a vulnerable tenant. Should he, for any reason, lose his tenancy, he loses his business and his home. He dispenses alcohol to the public and, therefore, has to exercise with great care a considerable degree of responsibility. There has been discussion for many years about whether licensees should be subject to the Landlord and Tenant Act 1954 or whether statutory backing ought to be given to the code of practice that was drawn up by the Brewers Society. Paragraph 9 of the code of practice would provide them with some security. I am pleased that the Government have seen fit to go down the former track.
A number of hon. Members have referred to compensation for goodwill, a matter which causes me concern. My hon. Friend the Member for Ilford, North (Mr. Bendall) answered that question adequately. If, for reasons beyond his control, a licensee is forced to relinquish his tenancy, he must be recompensed for the important element of goodwill. It has been suggested that the Minister will think again about the matter and that when the Bill is considered in another place their Lordships may also consider that the Bill needs to be amended.
I draw the attention of the House to earlier precedents. The other place has been kind to the licensed trade. Hon. Members will recall that when the Licensing Act 1988 was considered in the other place, amendments were tabled on opening hours on Sundays. They were carried, not just because of the force of the arguments in favour of those opening hours but because the Minister was asleep when the House divided. I shall not mention him by name, but he will be known to hon. Members.
I hope that the sense that has been shown by the other place regarding the licensed trade and the precedents that have been set by earlier legislation will be repeated. Compensation is important to the trade. I hope that that question will be addressed before this welcome measure reaches the statute book.
6.2 pm
Mr. Harry Barnes (Derbyshire, North-East) : My hon. Friend the Member for Jarrow (Mr. Dixon) referred to four points that had been raised by the National Licensed Victuallers Association. They have also been raised by local licensed victualler associations. I have been contacted
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both by the NLVA and the Chesterfield and district body. I have also met the Clay Cross licensed victuallers, who made the same points.The LVAs believe that contracting-out should not be a condition of granting a new tenancy ; that publicans should have the first option to purchase from the brewery ; that brewery companies should not take back houses for management without taking into account the goodwill of the business ; and that a spouse's rights should be protected. Tenants are in a vulnerable position because of the nature of the business. I intend to refer to additional problems that tenants face.
The enterprise culture has resulted in changes to the licensed trade and the control of public houses. There have been dramatic changes to the terms on which licensees are granted tenancies. Pressure has also been exerted on those who already have tenancies, even when the tenant is doing quite well and is popular in the community. The services that tenants provide are not entirely commercial. Pubs provide a meeting point where people can congregate. It is a form of working-class culture which draws people together. That cannot readily and easily be quantified in terms of the cash element that seems to dominate all decisions.
The changes to opening hours have led to problems for licensed victuallers. Brewers have told tenants when they should open. However, tenants wanted greater flexibility so that they could control opening hours. The result is that their families and the few people whom they employ are being exploited.
A number of tenants will be affected by the poll tax. As they are obliged to live on the licensed premises, those are said to be their sole or main place of residence. That is part of the contract. However, a number of them may have a second home close by. It is a peculiar second home ; most people do not have a second home that is only two or three streets away. Tenants make use of their second home and may want to move to it when they retire. It cannot readily be let. However, the community charge provisions mean that poll tax has to be paid both on a three-bedroomed house--the modest accommodation that some tenants may have--and on the licensed premises. Some tenants need to have a second home because of the impermanent nature of the tenancy. It provides a safeguard for them if things go wrong.
Mr. Crowther : My hon. Friend has made an important point. Is he aware that at least one local authority has reached the decision, very sensibly in my view, that it is appropriate to levy the poll tax only on the public house and to make no levy in respect of the second home when a tenant is obliged, by the terms of his tenancy or licence, to reside in the public house? I hope that other local authorities will take that sensible decision.
Mr. Barnes : That is a valuable suggestion. However, local authorities have to ensure that it does not appear to others that a special group has been exempted. The Government ought to take on board my hon. Friend's point. There is still time for them to write into the Bill a provision that would require all local authorities to follow that course. The Government must ensure that special privileges are not thought to have been granted to one particular group. My hon. Friend's suggestion would allow local authorities to get round that problem.
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Many licensed victuallers are faced with problems, just because of the kind of community that they serve. At Clay Cross the growing problem of indebtedness in the local community means that public houses are used more at the weekend and are only sparsely attended in the rest of the week. Care should be taken in developing areas that suffer relative deprivation to retain local provisions. A clean sweep, through a commercial approach, might devastate the viability of existing provisions that might be required as part of a growing community. I hope that the special concerns and difficulties encountered by tenants within such communities will be taken into account in the later stages of the Bill.6.10 pm
Dr. Moonie : My hon. Friends and I have considered carefully whether to vote against the Third Reading. We are particularly disappointed by the Government's failure to recognise the cogency of our amendments on contracting-out. The Minister listened politely to everything that we and many Conservative Members said, but he did not accept any of our amendments. That is sad, because our motive throughout has been to improve a piece of legislation with which we agree in principle.
I still believe that the Bill has several flaws. However, my disappointment is tempered by the awareness that it will now proceed to another place, where, we hope, older and probably wiser heads than the Minister's will see the merit of at least some of our proposals. Therefore, after due consideration, I have decided to ask my hon. Friends not to vote against the Bill, but to await the outcome of that debate.
6.11 pm
Mr. Redwood : I was expecting more from the hon. Member for Kirkcaldy (Dr. Moonie). I thought that he might have some new arguments that would shed light on our debate. What a disappointment it was that there was nothing new in his final speech.
The hon. Member for Newcastle upon Tyne, North (Mr. Henderson) graced the House with a rather more extensive resume of some very old arguments that we heard in Committee and one or two new ones. The first was the idea that there was the right to buy for any employee in a Government-owned business. Unfortunately, there is no such right to buy, and nor will there be an intention to provide one by Act of Parliament. There are circumstances, such as those of theNational Freight Corporation, where it makes sense for the vendor to sell to the employees because it was a good package and was a way of extending the Government's general policy of more employee ownership which has been reflected in a number of tax changes and other measures. However, there is no right in law to buy any business premises or business from its owners, and to insert one into the law for one particular category of business tenant and not the rest would be extremely skewed legislation. I hope that the hon. Gentleman will do his homework a little better on the National Freight Corporation which, as he rightly hinted, was a great success of the Government's policies which Conservative Members welcomed.
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The hon. Gentleman then revisited the issue of widows' rights and said that the problem of the protection offered by landlord and tenant legislation was that it did not necessarily mean that the spouse would inherit those rights, as that would require the nomination of the tenant before he dies of who takes over the estate. That is a perfectly good security as there may be circumstances in which, for example, the widow did not wish to take over the responsibilities of running the business and the tenant had decided that it made sense to pass the tenancy to the son who would make sensible provision for his mother while taking over the obligations of the tenancy.Nor would the hon. Gentleman's suggestion that reduces the protection on offer to the widow cover other relationships within the family--for example, if the publican had a stable relationship with a lady but had not got around to marrying her. He might want to nominate her, and that would not be possible under the hon. Gentleman's amendment.
The legislation presents more appropriate arrangements which allow the tenant to nominate before his death who will inherit that part of his estate. We are creating an important property right which he will pass on to the person of his choice. I cannot accept that it is worthwhile having less protection built into the Bill because of that bogus point.
Mr. Simon Hughes : If there is no clear succession, no disputed will, no clear will or no will, is there any way in which an existing spouse, who is the obvious successor and wants to continue running the business, will be protected or will things remain as uncertain for her under those circumstances?
Mr. Redwood : I use this opportunity to urge all people who will be passing on that property right to note that they should make sensible arrangements to protect the interests of their spouse. The hon. Gentleman is right that if there is confusion over the estate things will be more difficult. It is not asking very much to say that people should make decent provision in good time for their wives or for other members of their family whom they wish to inherit that right, and it would be common prudence to do so.
I made my position on compensation clear in my response to an earlier debate.
The hon. Member for Newcastle upon Tyne, North spoke about Scotland. He ignored the fact that Scotland has a different brewing and tenancy market from that south of the border. In Scotland, on the latest figures I have available, only 18 per cent. of pubs are brewer-owned, compared with 69 per cent. in England. There is such a big difference because there is a much bigger free trade in Scotland. The hon. Gentleman also recognises that the legislation takes the form of an amendment to an existing piece of legislation to drop an exemption that we consider is no longer right or appropriate. There would be no means by which we could effect the same for Scotland as that would require entirely different legislation that would have to consider the balance of business tenancies across the Scottish economy, because Scotland does not have legislation equivalent to that for England and Wales. There is a different settlement for Scottish regions and that would require looking at afresh. It would be a major task to walk over that ground affecting all business tenancies.
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We have had a reprise of the previous debate about the nature of contracting-out. I can only repeat the assurances and clarification that I gave then about the procedures that will be followed and the reasons why it was thought to be a good thing when it was introduced in 1969 by a Labour Administration and why we feel that it remains true today for business tenancies in general and for licensed tenancies in particular.I am delighted that my hon. and learned Friend the Member for Burton (Mr. Lawrence) agrees that the Bill represents a step in the right direction for tenants' rights. I also agree with him that, contrary to the suggestion of Opposition Members, there has been no conspiracy. The balance of rights for tenants has not been reached because the brewers have dictated the terms to the Government. It is the result of the Monopolies and Mergers Commission's inquiry and the Government's view that there needs to be improved protection for tenants and that this was the most straightforward and simple way of bringing forward measures to provide protection as quickly as possible. I am grateful that the Committee did not unduly detain the Bill, because it was an essential part of the package that we get the legislation through in good time so that protection can begin to bite as soon as the Bill receives Royal Assent.
The Government have responded to the lobby of the hon. Member for Rotherham (Mr. Crowther). My hon. Friends, the National Licensed Victuallers Association and I quite agree that tenants need protection quickly and that is why it is going ahead on time. The hon. and learned Member for Burton--I mean my hon. and learned Friend ; how could I be so churlish after what he said about me--asked about goodwill. I can only repeat what I said earlier about the nature of goodwill and the monitoring that the Government and the Office of Fair Trading will undertake in connection with the general legislation for all business tenancies, and the detailed package of proposals affecting the brewing industry, which was regarded as a balanced package extending rights and competition in the industry in the way specified.
The hon. Member for Southwark and Bermondsey (Mr. Hughes) welcomed the good news on widows. I wish that Labour Members would understand that our
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proposal deals with the problem better than amendment No. 3 would have. I hope that I have clarified for the hon. Member for Southwark and Bermondsey how tenancies will be subject to protection over a phased time period, for which the starting date must be July 1989 because that was when the policy was announced. The terminal date has been judged to be July 1992 because we do not wish the legislation to be retrospective. There must be a cut-off point by which all the tenancies are covered, and July 1992 was our balanced judgment of how to overcome the twin pulls of not wishing to disrupt agreements retrospectively but wishing to have all the protection in place for all tenancies by the summer of 1992, by when the other measures will have come into full effect. We tried to phase the MMC conclusions to ensure advancing tenancy protection at the same time as a growing relaxation of the ties, which have caused other changes.The hon. Member for Southwark and Bermondsey asked about the turnover of brewery tenancies, which I clarified in an intervention. I repeat that we are interested in monitoring the success of the policy in the ways that I have described.
My hon. Friend the Member for Romsey and Waterside (Mr. Colvin) asked about compensation, which I covered in a previous statement. I hope that my noble Friend the Minister will not be asleep when these measures are going through the other place. I have been attentive to the debate because these are serious matters which require the full-time attention of the Minister on duty.
The hon. Member for Derbyshire North-East (Mr. Barnes) dealt with issues far removed from the Bill, with his interest in the community charge and the redevelopment of bad areas. I dealt with the hon. Gentleman's general remarks on the four points made by the NLVA before he arrived.
The Bill makes a welcome improvement to tenants' rights. That improvement was sought by all hon. Members, and I strongly recommend that they give the Bill a Third Reading.
Question put and agreed to.
Bill read the Third time, and passed.
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